The surprise was not that Corus needed to raise money, but that he was able to muster sufficient support for this kind of fundraising. Normally, companies in a pickle have to raise money via a rights issue, where investors get to buy new shares at a discount to the prevailing price, and if they don’t want the shares, they can sell on their entitlement to them. An open offer carries no such rights and the Corus one was priced at a minimal discount to the share price just before the announcement.
That doesn’t matter too much now, since the share price rose sharply immediately after. The euphoria was down to the perception that Mr Varin has mended fences between the English and Dutch arms of the business, not to mention the unions, who also welcomed the cash call. If you’re a Corus shareholder, you may as well buy your rights and bank a quick profit. But bear in mind that Mr Varin’s restructuring plan is a long haul, and that steelmaking historically has been a risibly unprofitable industry.
AWG, which owns Anglian Water, was dealt a blow this week when the regulator, Ofwat, denied its request to increase prices and instead ordered it to cut them. The regulator effectively said that some of Anglian’s problems were of its own making, and that funding for infrastructure work granted in the last price review was no longer needed. The ruling raises questions over how long AWG can continue to pay hefty dividends.
Shares in International Power, once part of privatised utility National Power, slumped after it warned that 2004 will be a very tough year. The news comes less than a month after the surprise resignation of chief executive David Crane. National Power shares traded at 470p before it split into International Power and Innogy. The latter was taken over by Germany utility RWE at 275p. Add International Power’s current share price of 111p, and you get 386p – meaning shareholders are almost £1 a share worse off then they were three years ago. In truth, though, that value would probably have been wiped out anyway, thanks to the collapse in UK wholesale power prices.
Pressure is mounting on UK retailers ahead of Christmas. Mild weather and higher interest rates may change shoppers’ habits, while on the other side of the ledger, retailers’ costs are being inflated by higher NI contributions and a recent rise in the minimum wage. Any significant tax rises in the autumn budget could cause alarm in retail boardrooms.
Does Darwin's theory apply to taxation? Colin ponders...
The EC has been instructed to draft a European Union (EU) directive authorising an EU financial transaction tax, which would apply to ten of the EU’s 28 member states
Accountancy watchdog the FRC has dropped its investigation into the former chief financial officer of Tesco, nearly two years after the supermarket was engulfed in an accounting scandal
Colin imagines how Apple's logo might change in the wake of the EC's ruling over its Irish tax arrangements